The ACT will cut electricity prices this year, bucking a trend of soaring power bills for the rest of Australia, as the territory benefits from long-term contracts that locked in low-cost renewable energy.
Basic tariffs will fall by a minimum of at least 1.25% from 1 July, the ACT’s independent competition and regulatory commission said on Monday. “This is equivalent to a real decrease of 4.93% after excluding inflation,” it said.
The reduction in the regulated tariff will shave $23 off the annual power bill for average households using 6500 kilowatt-hours of electricity annually, and $88 for average non-residential users.
“ACT is the only jurisdiction in the national electricity market where regulated tariffs will decline in 2022-23,” senior commissioner, Joe Dimasi, said in a statement. Standing offers are now cheaper than those offered in New South Wales, Victoria, Queensland and South Australia, he said.
How the estimated annual power bill of $1800 in the ACT will stack up with prices in other jurisdictions. (Source: ACT's ICRC.) pic.twitter.com/SVcj2JBcdh
— Peter Hannam (@p_hannam) June 6, 2022
“The price decrease is driven by a decline in the ACT government scheme costs this year, which more than offset the increase in wholesale electricity costs,” Dimasi said.
Wholesale prices in the national electricity market more than doubled in the March quarter from a year earlier, and have risen more since. Russia’s invasion of Ukraine sent global energy costs higher while regular outages by Australia’s ageing coal-fired power stations have lately added to the local price spike.
Electricity prices will rise by as much as 18% from July in parts of the national electricity market after wholesale prices increased 49% in Queensland and 41% in NSW, the Australian Energy Regulator said last month when it released default market prices for the 2022-23 year.
Long-term contracts devised by the ACT government to enable it to reach 100% renewable energy have served to shield its energy users from the higher prices faced by other regions.
The ACT’s deputy chief minister and energy minister, Shane Rattenbury, said average household bills for this coming financial year would be about $800 lower than those in neighbouring NSW.
“It’s underlined how fossil fuels are subject to the vagaries of geopolitics, that are completely out of our control,” Rattenbury said. “Locally produced renewable energy is entirely within our control.”
The territory’s wholesale price had averaged about $90 a megawatt-hour, well below the $200-$300MW/h other states would have been paying, he said.
Simon Corbell, the architect of the ACT’s scheme when he served as the territory’s climate and energy minister, said “some form of contracting is beneficial to consumers, beneficial for renewable energy development and beneficial for emissions reductions.
“ACT energy users will be protected during this period of very high prices because of the fixed prices they pay for their renewable energy,” said Corbell, who now heads the Clean Energy Investor Group.
“They will be in a better position compared to consumers around the country, no doubt, and there’s the complete offset of the emissions profile of the electricity sector, a very important outcome,” he said.
The ACT reached 100% renewables in 2020.
The method of auctions in the ACT that fixed a price for renewable energy was a lifeline for the renewables industry in Australia after the arrival of the Abbott Coalition government in 2013 chilled investor confidence in the sector.
Other states, including Victoria and NSW, have since taken up the approach to encourage more clean energy supplies.
“The ACT is a renewable energy trailblazer, not just at home but abroad too,” said Richie Merzian, director of the Australia Institute’s climate and energy program. “It was the first major jurisdiction outside Europe to reach 100% renewable electricity status.”
“Switching to renewables is not just good for the climate but good for wallet, with Canberran’s enjoying cleaner and cheaper power,” Merzian said.
